Govt plans criminal cases against IPO scam accused

TNNMar 11, 2006, 01.32am IST

NEW DELHI: The government is planning to begin criminal cases against those accused in the IPO scam. CBI, which has been given the job of investigating the case has decided to book those who had set up multiple demat accounts and cornered shares in public offers like Yes Bank and IDFC, under Section 68A (1) of the Companies Act.

The provision prescribes a five-year jail term for anybody who applies in a fictitious name for shares of any company. Invoking the provisions of the Companies Act, gives greater room for prosecution to the CBI which had so far treated the cases as one of fraud. The upping of the scope for investigation shows the earnestness of both the finance ministry and the Securities and Exchange Board of India to take a stricter role in the case.

According to senior officials, there has been both a systemic failure on the part of the regulators to block the source of the crime, as well as a criminal intent by those who cornered shares.

Finance minister P Chidambaram recently told Parliament, "All agencies of the government including RBI, Sebi, CBI and CBDT have been activated and severest action would be taken against those accused". The minister listed among those accused the applicants, managers of several bank branches, brokers and depository partners. The minister also acknowledged that it was a difficult task to check such financial irregularities.